The California Supreme Court has accepted for review a case in which lower courts ruled that a state agency may not provide tax-exempt bond financing to religious schools.

The California Statewide Communities Development Authority (CSCDA) sought to provide tax-exempt bonds to assist Oaks Christian School in Westlake Village, California Baptist University in Riverside and Azusa Pacific University. The schools sought the money to build classrooms, athletic fields, offices and other capital improvements.

The authority filed a validation action in Sacramento County Superior Court in hopes of having the proposed bonds declared legal. But a Superior Court judge ruled that CSCDA’s proposal violated article XVI, §5 of the state constitution, which prohibits the government from aiding any church or religious sect, or supporting any school controlled by a religious organization. In a 2-1 decision, the Third District Court of Appeal upheld the lower court. Neither court addressed federal constitutional issues, although dissenting Third District Justice George Nicholson wrote that he believed the CSCDA bonds would not violate provisions of either the state or federal constitution.

The state Supreme Court voted unanimously to accept the case. It is California Statewide Communities v. All Persons Interested, No. S124195.